T-Mobile’s sale of the former Sprint wide area network asset for $1 to Cogent Communications is not as shocking as it might seem. The asset was not central for T-Mobile, though generating about $739 million in annual revenue. T-Mobile likely will get a big discount on IP transit services it will buy from Cogent for nearly five years.
Also, Sprint’s network has received relatively scant investment for up to two decades, as other wide area network service providers (mostly new entrants) were winners as WAN traffic shifted to TCP/IP and much traffic was carried on owned networks, rather than purchased from wholesalers or retailers.
Cogent sees benefits in the form of increased fiber network footprint will be owned in fee simple rather than leased under IRUs with finite terms. Cogent also will gain scale in dedicated internet access, IP transit, Virtual Private Networks (MPLS, VPLS) and colocation/data center market spaces.
Cogent also will gain entry into the North American market for wavelength and dark fiber sales.
Additional international operating licenses (India and Malaysia) also will be gained in large markets where Cogent has no presence today.
T-Mobile unloads a business that increasingly was viewed as a distraction from the core mobile services business.
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